Despite digging deep, income is elusive

Miners recorded the biggest drop in income of any industry in 2009-10, by $50 billion to $140 billion, and their tax bills were sliced nearly in half in the same period.

The latest Australian Taxation Office statistics revealed the extent of the fall at the same time as some members of the industry fight the introduction of the $10.6 billion minerals resource rent tax.

Recent advertisements run by the Minerals Council of Australia (MCA) claim the industry pays on average 41.5 per cent in total tax including royalties.

The MCA, which views the mining tax as workable, said that statistics released yesterday aligned with its own tax estimates.

“It is obvious that taxation receipts declined in ’09-10 due to the global financial crisis," said an MCA spokesman.

Company Profile

Fortescue was among the 73 per cent of mining companies, which numbered nearly 4300, which paid no tax in the 2010 fiscal year.

The rate for all companies was 61 per cent.

Fortescue has since paid its first tax instalment, for the 2011 year, and Mr Pearce said more were to come.

“I would anticipate that with the expansion projects that are well advanced and the relatively strong commodity prices, the company income tax flows from [resource] companies will increase substantially for the current and future years."

The mining industry’s 49.3 per cent fall in net tax led the overall 10.6 per cent decline in company tax take for the 2010 year.

The share of net tax paid by the industry fell nearly 10 percentage points to 13.5 per cent, outstripping the overall dip of 5.4 per cent in company income.

The extreme capital intensity of exploration brings massive deductions that reduce tax bills, particularly in early years before resources are mined and sold.

It is understood that the government has “no appetite" for cutting the billion-dollar mining tax breaks flagged as possible options to fund a $450 million change in the coming budget that will help loss-making small businesses. That includes exploration deductions and fast depreciation for oil and gas pipelines.

But the industry fears that another benefit – deductions for stripping top layers of soil in preparation for mining – also faces a cut.

More companies – a total of 272,985 – were trading at a loss in 2010, up marginally to 35.1 per cent for companies.

The statistics also showed that the petroleum resource rent tax raised $1 billion dollars in the 2011 fiscal year, down from $1.26 billion.